Digitising the agri-food supply chain - agri-tech hype or a $120 billion opportunity?
Shining a light on the data blind spot between farm and factory.
Rather like electricity and running water, many of us take the easy availability of fresh fruit and vegetables for granted. As consumers, we rarely stop to think about it – until the lights go out, the tap runs dry and shelves empty.
Global food supply and security issues intersect with the biggest challenges of our age including climate change and population growth. As governments and corporations invest in new technologies that will transform transport and energy consumption, what can be said about the efforts made to modernise the food supply chain?
In a connected, data-driven world, is the agri-food supply chain fit for purpose? Is it ready to feed a population of 9 billion by 2050?
Agriculture has some catching up to do. Research from the McKinsey Global Institute (MGI) ranked it as the least digitally advanced industry within the entire US economy.
Analysis from BCG Henderson Institute also shows that food waste occurs throughout the entire supply chain, but it is most pronounced during production. Fruit, vege
tables, roots and tubers make up the greatest proportion of tonnes lost per year – and that happens during production, handling and storing.
Many companies have been slow to adopt digital processes and waste reduction targets throughout the food value chain. Instead, efforts to improve productivity have focussed on farm hardware and factory production lines. Reducing waste in between has been harder to resolve due to a lack of information. The BCG estimates that the adoption of tools which better connect the supply chain could reduce the problem of waste and inefficiency by $120 billion annually.
They also highlight the lack of coordination between stakeholders across the value chain, particularly between growers and the processors. This too contributes significantly to inefficiency and waste. Improving the supply of information about crop progress, inventory and demand patterns between Producer Groups and Growers could also reduce the cost of waste by $60 billion annually.
The case for innovation and supply chain transformation
It’s clear then that the agri-food supply chain requires rapid digital transformation. Stakeholders need more information in order to make better decisions. They need faster access to soil sample data, crop cover, weight, size, external properties and defects. The latest weather information and images from satellites are also vital so that critical decisions can be made about when to harvest and when to store.
IoT, AI and the advent of real-time data sources, mean that those insights are now available if they can be connected online and aggregated. Growers, Procurement teams, Commercial Managers and Supply Chain Analysts now have the opportunity to visualise supply and demand and make better informed, data-driven decisions.
Reducing waste isn’t just about increasing the volume of food that makes it to our table. Improved visibility of quality and yield allow crops to be repurposed and regraded according to best fit for market. What may not have met the specification for the supermarket, can be reused as cattle feed or pet food. Lower quality fruits can be juiced or pulped or used in sauces. This means that rather than creating food waste, an alternative use can be found more easily when you have a complete picture of supply and commercial opportunities side by side. Here then, is an opportunity to increase revenue in an industry which has always struggled with very tight margins.
There are clearly examples of innovation already in use within the food-supply chain. GPS guided combines and drones are commonplace on the farm. Automated food production lines are the subject of television documentaries. However, there appears to be far less public awareness of what happens in between. The agri-food supply chain has not enjoyed the same level of investment and innovation. The inefficiency - and opportunity - lies somewhere between the farm and the factory.
Farm Management Software typically accommodates manually-entered records for operational cost management, planning and general bookkeeping. FMS provides a small part of the data needed for Producer Groups to make important decisions - area’s planted, varieties, and spray records required for compliance. However, data within FMS is often incomplete and, given there are over 20 FMS providers in the UK alone and many more cloud-based systems, the data can be inaccessible and disparate. It is still common practice for Producer Groups to ask their 20-200 plus growers to share spreadsheets and PDFs via email.
Similarly, at the pack house or factory, many ERP (Enterprise Resource Planning) systems are ill equipped to deal with the vagaries of fresh produce and the ever-increasing technical details required to accompany supplied crops.
Generic ERP's are limited in the range of data they can make available about the fresh produce in production. The marketable yield for a load is only known after the full load is washed, processed and packed. This update is shared daily with procurement teams who are then able to update their supply plans. However, the daily report tells the procurement team about loads received days, or weeks, earlier. Therefore, supply planning can be weeks behind reality.
Research suggests that the adoption of ERP within the fresh produce industry has been slow. This has been attributed to complexity, a lack of skilled personnel and a failure of generic ERP platforms to align with agricultural processes.
Farm Management Software and ERP systems are used at the polar ends of the agri-food supply chain, both primarily used as bookkeeping tools, and both lacking the ability to show what is happening in between. Once a seed is planted, Producer Groups (who supply supermarket chains with thousands of tonnes of fresh produce each year) would benefit from critical information indicating the health and predicted yield of suppliers’ crops. Similarly, the impact of weather and satellite imagery - to track NDVI, IRECI and ground cover – can all provide a rich source of data to help traders forecast market availability more accurately. Producer groups can also benefit from an up-to-date inventory to avoid a deficit and see the progress of contracts overlaid against predicted supply.
When all this data can be accessed and presented in a meaningful way to all stakeholders – from the grower to the supermarkets – then the whole supply chain can be optimised, waste reduced and profit increased.
Towards a connected food supply chain
The supply chain is in continual flux. It stretches, contracts and reorganises itself to accommodate geopolitical upheaval, consumer trends and unforeseen events. Until the Covid pandemic, evidence suggests we were eating out more frequently. Compare that with recent lockdowns, where we experienced empty shelves as supermarkets struggled to keep up with demand for fresh food to be cooked at home.
Shifts towards online retail, plans for autonomous transportation and the growth in demand for fresh produce are all trends which will affect the supply chain in the years to come. It’s clear then that the industry needs to be more connected, flexible and efficient if It’s going to deal with the challenges ahead.
At KisanHub we’ve just released our Reporting and Analytics Dashboards to shine a light on that critical data blind spot between the farm and the factory.
The Dashboards aggregate real-time information from our existing range of applications to provide a comprehensive overview of crop progress, weather reports, satellite imagery, stock levels, customer contracts and more.
Replacing spreadsheets and some degree of guesswork, the new update provides one source of truth for Producer Groups and their suppliers. Critical data sets are summarised in one place to provide actionable insights which can improve margins, reduce waste and streamline operations. KisanHub improves supply chain efficiency with tools that can better match supply and demand and enable waste to be tracked and reduced.
Commercial Managers, Supply Chain Analysts and Procurement Teams can all use the application to make better purchasing decisions, work collaboratively with growers and plan delivery with greater accuracy.
Connecting people with data, and people with people
We’re just one small part of a growing global community of technology innovators seeking to make the food supply chain more efficient. Together we share a mission to support one of the world’s most meaningful challenges - how to feed a population of 9 billion by 2050.
It’s time for agriculture to fully embrace technology to meet many of the biggest challenges of our age. IoT, Artificial Intelligence and the cloud will all play a part in connecting people with data so we can make the changes necessary to meet our goals. Consumers also need to play their part and modify their behaviours to reduce waste, but it’s also essential that we use technology to help connect people with people. Agronomists, Producer Groups, Supermarkets and Governments all need to work together and analyse the available data to streamline the food supply chains of the future.